At the theater where I watched a preview of Paranormal Activity last night, somebody ran out of the auditorium and threw up. It was that scary. And the most terrifying part isn't what's "paranormal" - it's the normal, everyday realism.

Spoilers ahead!

I know the ultra-low-budget Paranormal Activity has been hyped a lot, and so I'm loathe to perpetuate that. Nothing bursts a nacreous bubble of delightful fear more easily than being told over and over that you're going to be scared. But the fact is that this horror movie gets it right on almost every level. Everything from the setting and characters, to the tightly-plotted story and minimal effects, worked brilliantly. Nothing ever felt like padding or gratuitous "we're going to amp up the tension with cheap jolts" bullshit. The terror was raw and real - all the more so because it was so understated.

Like intelligent urban horror TV series Supernatural, Paranormal Activity seamlessly blends contemporary suburban life with ancient forms of unexplainable violence. The film begins with day trader Micah buying a fancy videocamera to record the weird, paranormal disturbances he and his girlfriend Katie have started experiencing. Early in the morning, they hear footsteps and breathing, and sometimes the water turns on and off by itself. Micah, a product of the "if it's on YouTube it's real" generation, wants to get the whole thing on tape. It's as if he thinks the very act of documenting this phenomenon is a way of warding off danger.

One of the first things Micah films is a visit from a paranormal expert whom Katie has called in to investigate their situation. As the expert asks Katie about her life, we discover (along with Micah) that she has been plagued by some kind of otherworldly force throughout most of her life. Sometimes the presence makes itself known; at other times it seems to be gone. The investigator looks alarmed and admits he's out of his depth. He specializes in ghosts, and it seems that Katie is dealing with a demon. He leaves her with the advice not to pay attention to the demon (say, with a video camera) or try to communicate with it, and gives her the number of a demonologist to call right away.

This is, dare I say it, where the movie gets realistic. Micah is one of those brash, slightly stupid people who thinks he can solve everything on his own - even things he doesn't understand. His attitude, as he puts it, is that the demon is in his house, bothering his girlfriend, and so he's going to fix it. Instead of encouraging Katie to get more help, he teases her about the demonologist until she agrees not to call him "unless things get worse." He also wheedles her into letting him film their demonic visitations at night.

As each night falls, and the camera's timestamp begins to spin forward, we watch in a kind of paralysis of fear as the demon makes its presence known (though we never see it). What makes these scenes so tense isn't the idea of a woman being stalked by a demon - we've all seen that before - but the way Micah and Katie's dysfunctional relationship brings on the horror. Katie is young and uncertain about what to do, even though she's dealt with this demon her whole life. She wants to banish the creature, but allows Micah to railroad her into calling the demon out just so he can get more cool footage.

Even when it becomes overwhelmingly obvious that there really is a supernatural creature in their house, and that it wants to destroy Katie, Micah refuses to stop trying to reach out to the monster. He makes things much, much worse, and Katie lets him. What we're seeing, more than a haunting, is the shocking portrait of a man who enjoys torturing his vulnerable girlfriend for kicks. Viewed in this light, the demon becomes a nauseating embodiment of Micah's disregard for Katie's life.

Usually images from a horror movie stay with you because they are so bloody disgusting. But there were completely ordinary images in Paranormal Activity that have been haunting my brain for the past 24 hours, all because of how disturbing they were in context. One of these images is of Katie sleepwalking, or rather sleep-standing, under the influence of her demon. We see her climb out of bed and simply stand, staring at Micah. As the minutes and hours tick by in fast-motion, her body seems to twitch back and forth with the tiny motions people make when they stand still. Just watching her stand for hours, swaying slightly, is possibly one of the most terrifying sequences I have ever seen on film.

Like I said, the chills in this movie depend entirely on context. If it weren't for the pitch-perfect, improv-style acting from stars Katie Featherston and Micah Sloat, as well as a great script from director Oren Peli, none of Paranormal Activity would have worked. Peli, a former videogame designer, filmed the entire movie during one weekend in his suburban San Diego home. And that works in his favor: The claustrophobic interiors of the couple's home add to the atmosphere. We never leave the house, and the longer we are there the more we feel strangled by Micah's overbearing aggressiveness and Katie's hopelessness in the face of danger.

I couldn't help but think that Peli's experience with videogame design was part of what made the film's structure work so well. Each night felt like a level, and the movie rapidly progresses to a showdown with the final boss. At no point is our terror attenuated or our attention distracted by outside things. There are no cats or dogs in the house to provide fake tension ("Oh that sound was just the cat!"), and every scene in this 90 minute flick feels absolutely crucial to the development of the story.

During the final sequences, which were the only parts of this $11,000 movie that producer Steven Spielberg helped with, we get just enough monstery payoff to justify our fear. But just like in real life, nothing is satisfactorily resolved. Instead Paranormal Activity gives us a messy, ambiguous slice of Katie and Micah's lives, which just happen to include a monster.